Verizon: An Opportunity Too Good To Miss

Dec. 08, 2022 8:08 AM ETVerizon Communications Inc. (VZ)54 Comments
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Vektor Research
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Summary

  • Macroeconomic pressures, rising interest rates, and soft operational results put pressure on the stock into a 12-year low. But the question is whether VZ's fundamentals are significantly worse than before.
  • While VZ lost Consumer postpaid phone subs for three consecutive quarters, the trend could change as the company had introduced an entry-level plan and offered promotions during the shopping season.
  • Still, despite intense competition in mobile wireless industry, the growth story from FWA services and the enterprise market remains. The C-band spectrum could provide an advantage in rural areas.
  • Furthermore, we like VZ's ability to generate cash flows consistently, the company's higher-than-peers ROE, and its attractive valuation.
  • However, VZ will likely have to refinance its debt with higher rates. The company has to pay $15 billion of maturing debt, spend $20 billion CapEx, and distribute $10 billion in dividends next year.

Verizon Building at 375 Pearl Street. Verizon is in a race to bring 5G cellular networks to market VII

jetcityimage

Verizon’s (NYSE:VZ) stock fell to $37 per share, a 12-year low, from its high of $60 per share in just two years. Nevertheless, as a sell-off often comes with an attractive buying opportunity, is VZ a BUY now?

Chart
Data by YCharts

Stock price change (%)

Stock price change (%) (Vektor Research, Yahoo Finance)

Postpaid phone churn rate (%)

Postpaid phone churn rate (%) (Companies)

VZ's postpaid phone churn rate (%)

VZ's postpaid phone churn rate (%) (Company)

Postpaid phone net adds (thousand)

Postpaid phone net adds (thousand) (Companies)

FWA net adds

FWA net adds (Companies)

Spectral efficiency forecast with C-band

Spectral efficiency forecast with C-band (Company)

Chart
Data by YCharts
Consensus EPS revenue trend

Consensus EPS revenue trend (Seeking Alpha)

VZ's FCF and cash flow margins

VZ's FCF and cash flow margins (Company)

VZ's CapEx outlook

VZ's CapEx outlook (Company)

VZ's debt maturities in 4Q21

VZ's debt maturities in 4Q21 (Company)

Chart
Data by YCharts

Chart
Data by YCharts

This article was written by

Vektor Research profile picture
208 Followers
An independent research that aims to produce in-depth fundamental analysis accessible to all investors. For now, we will cover a group of stocks in within the same sector to provide investors with more comprehensive analysis. At times, however, we will write about companies with wide moats and sold at reasonable prices, those that fall out of favor but still retain a turnaround story, and smaller companies that are not well-known by the market but hold significant upside.

Disclosure: I/we have a beneficial long position in the shares of VZ either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Research reports are written based on analysis and expectations of the analyst(s), and the analyst(s) is required to include sources for external data included in the analysis. The research analyst(s) is not responsible for any inaccuracy caused by human errors. Still, Vektor Research will make sure, with reasonable efforts, to reduce such mistakes as minimal as possible. Please note that the forecasts do not guarantee any future performance. Vektor Research, along with the analyst(s), is not responsible for any loss, expenses, and the reader's decision-making. The reports do not force readers to act towards any securities.

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